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Software giant Salesforce had a successful January quarter. It publishes its results for the April quarter on Wednesday, after the market closed.
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Shares fell late in trading on Wednesday, despite the company reporting better-than-expected results for its fiscal first quarter ended April 30.
Investors may be disappointed that the company did not raise its full-year revenue outlook despite the pace in the first quarter.
Salesforce shares were down 5.1% in late trading after the earnings report.
This is breaking news. Read a snapshot of Salesforce revenue below and check back soon for more analysis.
What can Salesforce do for a callback?
As you may recall, Salesforce (ticker: CRM) had a successful January quarter, which saw better-than-expected results and raised expectations. It was only the beginning. Salesforce, a leader in cloud-based enterprise software, also unveiled an extensive stock buyback program. He also created a board-level “corporate transformation committee” after five activist investors took stakes in the company. Then the board dissolved a committee focused on mergers and acquisitions.
Add to that some recent announcements regarding the company’s artificial intelligence projects, and the stage was set for a big step forward.
And in fact, Salesforce stock is up 32% since the company released its latest earnings on March 1.
Salesforce reports April quarter results after the close Wednesday. Forecasts called for revenue of $8.16 billion to $8.18 billion, with adjusted earnings of $1.60 to $1.61 per share and generally accepted accounting principles earnings of 24 to 25 cents per share. Street consensus estimates call for revenue of $8.14 billion, adjusted earnings of $1.59 per share and GAAP earnings of 30 cents per share.
For the July quarter, the Street sees sales of $8.5 billion and adjusted earnings of $1.68 per share.
For fiscal year January 2024, Salesforce forecast revenue of $34.5 billion to $34.7 billion, up 10%. The forecast called for earnings for the full year on an adjusted basis of $7.12 to $7.14 per share. Salesforce forecasts a non-GAAP operating margin for the year of 27%. On a GAAP basis, the company forecasts fiscal 2024 earnings of $2.59 to $2.61 per share.
Evercore ISI analyst Kirk Materne wrote in a note Wednesday that he “doesn’t expect a ton of surprises” on Salesforce’s earnings call. He thinks margins will be a little higher than Street’s estimates and added that the CRPO – the current remaining performance bonds, a measure of future work – is expected to rise by around 11%, which should be enough for investors.
Materne adds that the street wants to see evidence that the business can continue to grow by 10% in the future. Given the recent rally, Materne writes that “the question at these levels” is whether there is a surprise growth driver in the second half and beyond, and in particular whether the company can monetize its AI initiatives. .
Wedbush analyst Dan Ives is more optimistic. He thinks the company will show a “modest increase” in street numbers. He is also optimistic about the company’s developments in AI. “We believe this is a major land grab opportunity that could significantly benefit CRM over the next few years and could increase overall revenue by more than $4 billion per year. …by 2025,” Ives wrote in an earnings preview note.
In early trading Wednesday, Salesforce stock was flat at $218.87.
Write to Eric J. Savitz at eric.savitz@barrons.com